Finian McGrath
Question:176. Deputy Finian McGrath asked the Minister for Finance his views on a matter raised in correspondence (details supplied) regarding inheritance tax; and if he will make a statement on the matter. [35844/14]
View answerTuesday, 23 September 2014
Questions (176)
Written answers
Capital Acquisitions Tax (CAT) is the overall name for both gift and inheritance tax.
For the purposes of CAT, the position is that the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary) determines the maximum tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise.
There are, in all, three separate Group tax-free thresholds based on the relationship of the beneficiary to the disponer.
Group A: €225,000 applies where the beneficiary is a child (including adopted child, step-child and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
Group B: €30,150- applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
Group C: €15,075- applies in all other cases.
Any prior gifts or inheritances received by a beneficiary since 5 December 1991 from within the same Group threshold are aggregated for the purposes of determining whether any tax is payable on the current benefit.
CAT is charged on the amount of the gift or inheritance that exceeds the beneficiary's tax-free threshold.
For example, as set out above, each child can separately receive gifts or inheritances from their parents up to the value of €225,000 without incurring any liability to CAT.
As each child in a family is entitled to their own separate tax-free threshold of €225,000 parents can make substantial gifts or bequests to each of their children tax-free.
The rate of CAT on the excess over the child's tax-free threshold of €225,000 is 33%.
Apart from the tax-free thresholds, a number of exemptions and reliefs from CAT are provided in CAT legislation.
A complete exemption from CAT is available in relation to gifts and inheritances transferring between spouses.
A gift or inheritance of a dwelling house that is the only or main residence of the beneficiary is exempt from CAT, subject to certain conditions.
Significant relief is also given to gifts and inheritances of agricultural property and business property, again subject to certain conditions.
It is not clear from the details supplied by the Deputy what particular aspect of the Capital Acquisitions Tax legislation he believes constitutes a burden on families. If the Deputy could supply full details of the particular matter that has been raised with him, I will arrange to have it considered.